22:21 30.11.2021


Circular economy as a marker against Nord Stream-II

5 min read
Circular economy as a marker against Nord Stream-II

Eduard Mkrtchan, entrepreneur, economic expert, head of a charitable foundation


Lately, I have caught myself in contradictory feelings twice. First, after the statement of one of the government officials, who stated Ukraine's global ambitions in building a circular economy during a meeting with the EC Commissioner. We plan to reduce emissions by 65% ​​by 2030. Despite the fact that in the EU by that time set the plan at 55%.

And then, entering one of our offices, I saw a car from a hypermarket that brought us a hundred bricks on a new wooden pallet. Seller representatives shrugged in response to our offer to give them a pallet and reuse it. They did not need it. Then I counted to myself the amount of wood that is thoughtlessly consumed nationwide…

These two factors made one wonder whether Ukraine is ready for a global reduction in emissions and waste and  are we really ready for the format of a circular economy, as government officials say.

A few words on the history of this concept. In 1990, two scientists from the Great Britain foresaw the gravitation of the world economy to a closed cycle. In this format, production waste is perceived as a resource. Governments and individual companies buy less raw materials. Instead, they think about how to recycle what they already have. To make the used materials a part of new products with preservation of qualitative characteristics.

The EU Circular Economy Action Plan states that it protects the environment and grows without increasing consumption. That is, without additional waste and emissions. According to EU estimates, this model will create 2 million jobs by 2030. And each house in the EU will be able to save up to 500 euros a year in energy. By that time, they expect to reduce the need for raw materials at all levels of production to 24%. They also plan to reduce the annual costs of enterprises by 630 billion euros.

The global transition to a circular economy is long, laborious, but irreversible. The Circularity Gap 2019 report, which is presented annually at the World Forum in Davos, states that only 9% of materials are reused in the world economy.

But what matters that the circular strategy is chosen by key players. Among them - 44% of companies in the top 100 "Fortune Global" list. For them, this is a bet on reducing raw material costs, new markets, customer loyalty, brand reputation.

Currently, there is a trend for painless transformation of waste from some industries to resources for others. Innovations form new production chains. And their participants are gaining new market outside the traditional sectors.

 The circular economy responds to strategic challenges. In particular, regarding the shortage of natural resources, high prices for raw materials and dependence on imports. All this is relevant for us given the aggressive advance of Nord Stream II. Therefore, the circular economy is a factor in counteracting this pipeline, which is directed against the interests of Ukraine.

However, environmental risk is the key to which this model responds. Global companies are optimizing costs, while simultaneously reducing CO2 emissions, reducing the burden on the mining industry, and reducing waste.

For example, Michelin returns 17 million tons of used tires to production processes every year. In 30 years, Nike has processed 28 million pairs of shoes to cover sports fields. Carlsberg, together with the Technical University of Denmark, is developing biodegradable wood fiber bottles, planning to get rid of waste completely.

Taking into account the active promotion of the circular economy model in the EU, we must admit that Ukraine is at the beginning of the road. In the Association Agreement with the EU, we have committed ourselves to harmonize Ukrainian and European legislation. In 2017, Ukraine adopted the National Waste Management Strategy. This is one of the key documents that confirms the principles of the circular economy.

It stipulates that in 2023, waste recycling in Ukraine should increase to 15%, in 2030 -  up to 30%. By 2023, 23% of the population must sort waste, and by 2030 - 48%. By 2030, we are committed to recycling up to 65% of our packaging.

These tasks look incredible so far. After all, Ukraine is in the top ten countries with the largest amount of garbage per capita with a critically low rate of its processing (3%). Almost 94% of garbage is taken to landfills. On the positive side, we can note the start of eco-plastic bags in supermarkets.

To reach the markers of the Strategy, the key participants in economic chains must be integrated into the circular concept. For this, it is important to invest in the technologies of storing raw materials in the production cycle. Because it is a business advantage in the conditions of unstable commodity markets.

The government's proposed waste management reform introduces a system of producer responsibility. Businesses are encouraged to minimize waste and switch to renewable materials. This topic is on the agenda, given the adoption in the first reading of the law "On Waste Management".

Ukraine must remove the barriers that slow down the introduction of a cyclical economy. The main one is unsatisfactory logistics. Its cost and quality are the determining competitive factors.

Low road quality is another important factor in the high cost of transport. Given the excessive costs of carriers for depreciation, this limits the circulation of valuable materials after use. That is why we need investment in transport infrastructure.

It is important to realize that there is not enough time for contemplation. We are either adapting to a circular economy, or we will be left behind the civilized world.